SEGMENT REPORTING

12 Months Ended

Dec. 31, 2012

Notes to Financial Statements

Note 13. SEGMENT REPORTING

The Company operates in six segments: concentrated apple juice and apple aroma, concentrated kiwifruit juice and kiwifruit puree, concentrated pear juice, fruit juice beverages and fresh fruits and vegetables, and others. Our concentrated apple juice and apple aroma is primarily produced by the Company’s Huludao Wonder factory; concentrated pear juice is primarily produced by the Company’s Jiangyang factory. However, as the Company use the same production line to manufacture concentrated apple juice and concentrated pear juice. In addition, both Shaanxi Province, where the factory of Jianyang factory is located, and Liaoning Province, where the factory of Huludao Wonder is located, are rich in fresh apple and pear supplies, Jinagyang factory also produces concentrated apple juice and Huludao Wonder factory also produces concentrated pear juice when necessary. Concentrated kiwifruit juice and kiwifruit puree is primarily produced by the Company’s Qiyiwangguo factory, and fruit juice beverages is primarily produced by the Company’s Qiyiwangguo factory. The Company’s other products include fructose, concentrated turnjujube juice, and other by products, such as kiwifruit seeds.

Concentrated fruit juice is used as a basic ingredient for manufacturing juice drinks and as an additive to fruit wine and fruit jam, cosmetics and medicines. The Company sells its concentrated fruit juice to domestic customers and exported directly or via distributors. The Company believes that its main export markets are the United States, the European Union, South Korea, Russia and the Middle East to North America, Europe, Russia, South Korea and the Middle East.  The Company sells its Hedetang branded bottled fruit beverages domestically primarily to supermarkets in the PRC. The Company sells its fresh fruit and vegetables to supermarkets and whole sellers in the PRC,

Some of these product segments might never individually meet the quantitative thresholds for determining reportable segments and we determine the reportable segments based on the discrete financial information provided to the chief operating decision maker. The chief operating decision maker evaluates the results of each segment in assessing performance and allocating resources among the segments. Since there is an overlap of services provided and products manufactured between different subsidiaries of the Company, the Company does not allocate operating expenses and assets based on the product segments. Therefore, operating expenses and assets information by segment are not presented.  Segment profit represents the gross profit of each reportable segment.

Segment profit represents the gross profit of each reportable segment.

(In Thousand) For the Year Ended  December 31, 2012	Concentrated apple juice and apple aroma			Concentrated kiwifruit juice and kiwifruit puree			Concentrated pear juice			Fruit juice beverages			Fresh fruits and vegetables		Others			Total
Reportable segment revenue	$	26,629		$	10,668		$	29,087		$	27,276		$	8,417	$	5,853		$	107,930
Inter-segment revenue		(3,742	)		(1,516	)		(162	)		(139	)		-		(15	)		(5,574	)
Revenue from external customers		22,887			9,152			28,925			27,137			8,417		5,838			102,356
Segment gross profit	$	4,640		$	4,535		$	8,507		$	9,288		$	4,663	$	1,440		$	33,073

(In Thousand) For the Year Ended December 31, 2011	Concentrated apple juice and apple aroma			Concentrated kiwifruit juice and kiwifruit puree			Concentrated pear juice			Fruit juice beverages		Fresh fruits and vegetables		Others			Total
Reportable segment revenue	$	29,502		$	15,614		$	14,187		$	20,974	$	7,880	$	1,423		$	89,580
Inter-segment revenue		(4,665	)		(70	)		(766	)		-		-		(58	)		(5,559	)
Revenue from external customers		24,837			15,544			13,421			20,974		7,880		1,365			84,021
Segment gross profit	$	4,412		$	7,661		$	3,182		$	7,905	$	3,746	$	567		$	27,473

The following table reconciles reportable segment profit to the Company’s consolidated income before income tax provision for the years ended December 31, 2012 and 2011:

	2012			2011
Segment profit	$	33,072,991		$	27,472,584
Unallocated amounts:
Operating expenses		7,878,474			8,423,881
Other (income)/expenses		(589,608	)		(171,944	)
Income before tax provision	$	26,054,125		$	19,220,647

The Company’s export business is primarily comprised of fruit juice concentrates. As most of the export sales are through distributors and therefore we are not certain exactly where the Company’s products are ultimately sold, revenue by geographical location is not presented. However, the Company estimates that our main export markets are the United States, the European Union, South Korea, Russia and the Middle East.

Our major customers are disclosed under Note 11 “Concentrations.”